Majestic posts 6.8% rise in group Christmas sales

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Majestic Wine today announces its scheduled Christmas trading update for the 10-week period ending 31 December 2018, reporting an increase in both Group sales and gross margin. Group sales growth accelerated to 6.8% (6.3% on an underlying basis) compared to the same period last year (3.2% and 4.1% underlying), and the group trading gross margin increased by 0.4%, led by strong performance in Naked Wines together with a solid performance from Majestic Retail despite the challenging market backdrop. The Group delivers c.30% of total annual sales during the Christmas trading period.

Divisional performance (at constant exchange rates):

DivisionSales
% YoY
Retail+1.5%
Naked Wines Total+15.9%
UK+12.2%
USA+21.0%
Australia+14.8%
Majestic Commercial+3.5%
Lay & Wheeler+5.3%
Total+6.3%


Rowan Gormley, group chief executive, commented: “The team have worked really hard over the Christmas trading period and have delivered sales growth across all our business units.

“As we said in November, consumer behaviour is changing and we’re seeing a revolution in retail. We think there will be winners and losers, and we believe we have what it takes to be one of the winners. We are uniquely placed, with the people, data and skills in place to succeed despite the headwinds we are seeing.

“While trading has been challenging over the Christmas period, the trends we reported in November are the same (namely strong growth in our overseas markets and our digital propositions but headwinds for our UK Retail stores). We look forward to setting out more of our future plans for the group, including the Retail business with our full year results in June.”

Thomas Brereton, retail analyst at GlobalData, a leading data and analytics company, comments: ‘‘Majestic Wine’s all-important Christmas trading period (in which it does 30% of its yearly business) saw solid topline results for all parts of the Group, with a particularly impressive performance from its luxury independent wines division Naked Wines (+15.9%). Its UK retail division, despite suffering from the “difficult trading conditions” that many retailers are quoting in their Christmas results, saw a reasonable sales increase; however, gross margins fell 1.2ppts year-on-year as Majestic relied on price cuts to entice greater numbers of customers. Investors did not react strongly either way in early morning trading, as full-year pre-tax profit remains in line with previous estimates.

“From the retail division’s point of view, Majestic Wine has indeed done well to remain buoyant, particularly as the Big Four heavily utilised promotions on alcohol over the same period; furthermore the discounters, particularly Lidl, continue to push their impressive alcohol propositions at the increasing number of customers coming through the doors – and so for Majestic to continue to convince shoppers to make exclusive, separate visits to its stores remains impressive.

“For 2019, Majestic Wine are in a good position to continue its growth path. Its customer-centric approach is a good one, and recent store visits show that it is working – staff are knowledgeable and engaging with customers, and stores have an appealing structure, with wines organised by country presenting a much more experiential shopping visit than its rivals. However, Majestic needs to make sure that it does not over-focus on its international expansion at the expense of its core UK retail market, which makes up 55% of the Group’s revenue. To remain a leader in the wine sector, it must not allow store standards to slip, otherwise the proposition pressure from the supermarkets may become overwhelming.”

Majestic Wine product stories:

Norwich set to be new Global Wine Capital

On the 25th December 2018, people settling down to their Christmas dinners in Melbourne, Missouri and Manchester all had an unlikely part of the world to be grateful for; Norfolk, England.

After being established in the small Cathedral city of Norwich exactly 10 years ago, Naked Wines has truly gone global. 2018 saw its strongest ever international festive period, with overall sales up 15.9% – including 21% in it’s US division and 14.8% in Australia. Historically the UK has always been happy to be lead when it comes to wine, now however it seems East Anglia is ready to have its say.

A Special Christmas for the Special Relationship

Whilst our politicians continue to wrestle with the UK’s place in the world, at least one transatlantic relationship is holding true – a mutual appreciation of wine.

UK retailer Naked Wines began trading in the US in 2012 and had their biggest ever Christmas – growing at 21% YOY. They’re affecting tastes too – with Naked’s American customers adopting a very British taste for Prosecco – sales were up 29.8% during the festivities.

In the UK Christmas is already dominated by imports of Coca Cola, turkey and Black Friday. At sister company Majestic the Special Relationship was also in evidence, as volumes of wine from North America rocketed 116% LFL over the month of December.

Social Media factor boosts rosé sales this Christmas

The ‘#DrinkPink’ generation had a knock on effect this December – with sales of rosé up 21% at UK online retailer Naked Wines in both November and December.

Tipped for a big Winter after months of Summer sun, sales of blush increased as more consumers took to snap the pale hues of Provence and beyond with their Christmas dinner.

Last minute treats – wine-shoppers leave it late

The week prior to the 25th December saw a LFL increase of 47% in sales at Majestic. It appears shoppers left it later than usual to get their own tipples for the big day – waiting until after the early madness of getting presents wrapped and the work parties ticked off.

The season of the unusual

More bottles of wine from ‘off the beaten track’ regions were sold this December than ever before. Wines from Eastern Europe, Greece and even England, amongst others, hit the spot as wine-lovers branched out for more adventurous tipples that graced their Christmas tables. England was one of the biggest winners, up 65%, whilst a renewed interest in German and Austrian wines helped to rocket volumes by 99%. Whilst in the Fortified Wine category, Madeira had an unexpectedly bumper Christmas – with sales up 20%.

It was a similar story at Naked Wines, where wines from Hungary, Bulgaria, Greece and Lebanon were up 58%.